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11 DEYO 2/5/2012 6:40 PM
305
DECONSTRUCTING PENSION COMMITTEE: THE EVOLVING
RULES OF EVIDENCE SPOLIATION AND SANCTIONS IN THE
ELECTRONIC DISCOVERY ERA
Michael W. Deyo*
I. INTRODUCTION
U.S. District Court Judge Shira Scheindlin is arguably the
nation‘s most influential judicial authority on the topic of electronic
discovery (―e-discovery‖). This article will review Judge Scheindlin‘s
seminal e-discovery opinion in Pension Committee,1 and analyze the
subsequent treatment of, and marks left by, a few notable aspects of
her ruling.
A discussion of Judge Scheindlin‘s Pension Committee Order and
Opinion is incomplete without first mentioning the series of
decisions which are her greatest legacy in the area of e-discovery,
collectively referred to as Zubulake.2 Indeed, the very first words
Judge Scheindlin penned in Pension Committee read ―Zubulake
Revisited: Six Years Later.‖3
In the Zubulake series of opinions, Judge Scheindlin brought into
focus the foundational legal principles relevant to modern discovery
practice: preservation, production, and spoliation4 of electronically
stored information. Judge Scheindlin illuminated the legal rules
* Michael W. Deyo is an attorney with Iseman, Cunningham, Riester & Hyde LLP
(―ICRH‖) in Albany, New York, and an Adjunct Professor at Albany Law School. He is a
graduate of Utica College of Syracuse University and Albany Law School. The views and
opinions expressed in this article are those of the author and do not necessarily represent the
views or opinions of ICRH or Albany Law School. 1 Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of America Securities
LLC, 685 F. Supp. 2d 456 (S.D.N.Y. Jan. 15, 2010), as amended May 28, 2010. 2 See Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. May 13, 2003) (Zubulake I);
Zubulake, 216 F.R.D. 280 (S.D.N.Y. July 24, 2003) (Zubulake III); Zubulake, 220 F.R.D. 212
(S.D.N.Y. October 22, 2003) (Zubulake IV); and Zubulake, 229 F.R.D. 422 (S.D.N.Y. July 20,
2004) (Zubulake V). 3 Pension Committee, 685 F. Supp. 2d at 461. 4 Spoliation is generally described as ―‗the destruction or significant alteration of evidence,
or the failure to preserve property for another‘s use as evidence in pending or reasonably
foreseeable litigation.‘‖ See Byrnie v. Town of Cromwell, Board of Education, 243 F.3d 93,
107 (2d Cir. 2001) (quoting West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.
1999)).
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306 Albany Law Review [Vol. 75.1
governing these emerging issues, and helped pave the way for the
December 2006 amendments to the Federal Rules of Civil
Procedure.5 Whether one agrees or disagrees with the lines drawn
by Judge Scheindlin, her Zubulake opinions indisputably captured
widespread attention and left indelible marks on the nation‘s
judicial system. Indeed, the Zubulake opinions have been cited
extensively, and are afforded deferential treatment by numerous
District Courts6 and by trial and/or appellate courts in several
states.7 It truly was a landmark case.
A simple reading of Pension Committee may leave one wondering
why others consider it the most notable e-discovery opinion since
Zubulake. After all, Judge Scheindlin simply revisits many of the
ideas and standards she first articulated in Zubulake, without
ostensibly upsetting or extending her initial rulings significantly.8
Upon close examination, however, practical intricacies are revealed
that substantially affect discovery practice. Moreover, the
subsequent treatment of Pension Committee by other courts has
highlighted the absence (and need for) national standards
pertaining to the preservation of electronically stored information
and the appropriate protocols governing spoliation sanctions should
litigants fail to do so adequately.
Judge Scheindlin‘s decision in Pension Committee is probably best
characterized as an attempt to further ignite litigants—and their
counsel—to take their discovery obligations seriously, and to
reinforce a sense of fairness for victims of spoliation. To this end,
Pension Committee is noteworthy for two reasons: (1) it
formulaically links the failure to carry out defined preservation
tasks with concepts of negligence and gross negligence; and (2)
where spoliation results from gross negligence, it provides for
rebuttable presumptions that the information lost was relevant and
that the innocent party was prejudiced by the spoliation.9
For these same reasons, Pension Committee is widely criticized for
5 The language of the December 2006 amendments to Fed. R. Civ. P. 26, 34, 37, and 45,
and the corresponding Advisory Committee Notes, track in large part, and are significantly
influenced by, the Zubulake decisions. 6 See, e.g., Williams v. N.Y.C. Transit Auth., No. 10 CV 0882(ENV), 2011 WL 5024280, at
*4 (E.D.N.Y. Oct. 19, 2011); Essenter v. Cumberland Farms, Inc., No. 1:09-CV-0539
(LEK/DRH), 2011 WL 124505, at *6 (N.D.N.Y. Jan. 14, 2011); Passlogix, Inc. v. 2FA Tech.,
LLC, 708 F.Supp.2d 378, 409 (S.D.N.Y. 2010). 7 See, e.g., Howard Reg‘l Health Sys. v. Gordon, 952 N.E.2d 182, 189 (Ind. 2011); Voom HD
Holdings LLC v. Echostar Satellite L.L.C., Index No. 600292/08, 2010 N.Y. Misc. LEXIS 6306,
at *49–50, *67–68 (N.Y. Sup. Ct. Nov. 3, 2010). 8 Pension Committee, 685 F. Supp. 2d at 471. 9 See id. at 464–65, 467–68.
11 DEYO 2/5/2012 6:40 PM
2011/2012] Deconstructing Pension Committee 307
establishing unreasonably stringent per se rules that are too
disconnected from everyday ―in the trenches‖ litigation practice, and
for swinging the pendulum too far in favor of parties seeking
spoliation sanctions by relaxing the burden of proof (and thus
encouraging spoliation motions as an offensive tactic).10 For
example, Judge Scheindlin deems the failure to utilize a written
litigation hold notice an act of gross negligence in and of itself (even
if verbal instructions are given); the consequence of which is a
nearly automatic presumption, as matter of law, that a party
moving for severe sanctions was actually prejudiced by an alleged
loss of discoverable information.11
The debate surrounding Pension Committee—and more generally
spoliation and sanctions—boils down to the trilogy of scienter,
relevance, and prejudice alluded to above, and the effect each of
these elements has on one another in the context of imposing severe
sanctions, such as an adverse inference jury instruction.12 Before
and after Pension Committee, courts across the nation have
struggled to find a consistent and fair balance, repeatedly
confronting questions like: Is the spoliation of evidence attributable
to ordinary negligence sufficient for the imposition of an adverse
inference instruction or must there be proof of bad faith? Who
should carry the burden of proving that evidence destroyed by an
adversary was or was not relevant, or that the innocent party was
or was not prejudiced? Should this burden be allocated among the
parties based upon the mental culpability of the spoliating party,
and, if so, to what extent?13 Judge Scheindlin provides her views in
Pension Committee; others reach disparate results.
10 See, e.g., Surowiec v. Capital Title Agency, Inc., 790 F. Supp. 2d 997, 1007 (D. Ariz.
2011) (noting that per se rules regarding spoliation are too inflexible and should be evaluated
on a case-by-case basis). 11 Pension Committee, 685 F. Supp. 2d at 465–67. 12 As Judge Scheindlin observed in Zubulake IV,
[i]n practice, an adverse inference instruction often ends litigation—it is too difficult
a hurdle for the spoliator to overcome. The in terrorem effect of an adverse
inference is obvious. When a jury is instructed that it may infer that the party who
destroyed potentially relevant evidence did so out of a realization that the evidence
was unfavorable, the party suffering this instruction will be hard-pressed to prevail
on the merits. Accordingly, the adverse inference instruction is an extreme sanction
and should not be given lightly.
Zubulake IV, 220 F.R.D. at 219–20 (internal citation and quotation marks omitted). 13 See, e.g., Reilly v. Natwest Mkts. Grp. Inc., 181 F.3d 253, 268 (2d Cir. 1999) (noting that
when a party‘s bad faith or negligence results in the failure to turn over relevant evidence an
adverse inference instruction might be appropriately given); see also e.g., Davis v.
Speechworks Int‘l, Inc., No. 03-CV-533S(F), 2005 WL 1206894, at *3 (W.D.N.Y. May 20, 2005)
(finding that the party seeking sanctions bears the burden of proving relevancy).
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308 Albany Law Review [Vol. 75.1
II. A SUMMARY OF THE PENSION COMMITTEE OPINION AND ORDER
Pension Committee involved a complex securities litigation filed
by a group of ninety-six investors trying to recover $550 million in
losses incurred from the collapse of two hedge funds.14 In
anticipation of litigation, the plaintiffs engaged outside counsel who
―telephoned and e-mailed plaintiffs and distributed memoranda‖
instructing the plaintiffs to begin collecting and producing to
counsel copies of relevant documents that were necessary to draft
the complaint.15 The case was filed in the Southern District of
Florida in February 2004; it was transferred to the Southern
District of New York in October 2005.16
The defendants asserted numerous discovery violations from
October 2007 to June 2008, including allegations that thirteen
plaintiffs failed to preserve electronically stored information and
documents, and then made ―false and misleading declarations
regarding their document collection and preservation efforts.‖17 The
defendants moved the court to impose sanctions against the
thirteen plaintiffs for their alleged discovery misconduct.18
According to the court, the plaintiffs targeted by the motion
―clearly failed to preserve and produce relevant documents that
existed at the time (or shortly after) the duty to preserve arose.‖19
The missing documents included 311 cross–referenced e-mails that
were not produced by some plaintiffs, but were by others.20 The
court also concluded that certain unknown, yet presumptively
relevant documents were missing from the plaintiffs‘ productions,
including documents that were presumed to have existed as part of
the plaintiffs‘ fiduciary duty of due diligence prior to making
significant investments in the hedge funds.21
14 Pension Committee, 685 F. Supp. 2d at 462. 15 Id. at 473. 16 Id. 17 Id. at 463. The defendants, noticing gaps in the plaintiffs‘ document production, made a
request to the court for declarations describing the plaintiffs‘ preservation efforts. In
response, the plaintiffs filed declarations in the first half of 2008. Id. at 462. Following
depositions of certain declarants, the defendants uncovered significant gaps in discovery
proffered by the thirteen plaintiffs, including finding that ―almost all of the declarations were
false and misleading and/or executed by a declarant without personal knowledge of its
contents.‖ Id. at 475. 18 Id. at 463. 19 Id. at 476. 20 See id. at 475. 21 Id. (―The paucity of records produced by some plaintiffs and the admitted failure to
preserve some records or search at all for others by all plaintiffs leads inexorably to the
conclusion that relevant records have been lost or destroyed.‖).
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It is important to note that Pension Committee does not involve
―any egregious examples of litigants purposefully destroying
evidence.‖22 Still, Judge Scheindlin imposed severe sanctions in the
form of a spoliation jury instruction against certain plaintiffs
because they ―failed to timely institute written litigation holds and
engaged in careless and indifferent collection efforts after the duty
to preserve arose.‖23
A. Court-Imposed Sanctions for the Spoliation of Evidence
It is well established that when spoliation of evidence occurs, a
court may impose discovery sanctions pursuant to Rule 37(b) of the
Federal Rules of Civil Procedure, and more generally, pursuant to a
court‘s ―inherent power to manage its own affairs.‖24
Initially, Judge Scheindlin notes that sanctions range in degree of
severity, and that the severity of penalties is tied directly to the
scienter of the spoliating party.25 She then attempts to define, in
the context of discovery misconduct, the meaning of various terms of
mental culpability cemented firmly in modern law: ordinary
negligence, gross negligence, and willful conduct.26 Applying these
concepts of scienter to discovery misconduct, Judge Scheindlin
22 Id. at 463. 23 Id. 24 Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 106–07 (2d Cir. 2002);
DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 135–36 (2d Cir. 1998); see generally
Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (―It has long been understood that ‗[c]ertain
implied powers must necessarily result to our Courts of justice from the nature of their
institution,‘ powers ‗which cannot be dispensed with in a Court, because they are necessary to
the exercise of all others.‘‖) (quoting United States v. Hudson, 11 U.S. 32, 34 (1812)). 25 Pension Committee, 685 F. Supp. 2d at 469–70. 26 Judge Scheindlin notes that ―[w]hile many treatises and cases routinely define
negligence, gross negligence, and willfulness in the context of tortious conduct, I have found
no clear definition of these terms in the context of discovery misconduct.‖ She refers to the
law school standby, Prosser & Keeton on the Law of Torts, to define several terms: she defines
negligence as
conduct ‗which falls below the standard established by law for the protection of
others against unreasonable risk of harm.‘ [Negligence] is caused by heedlessness or
inadvertence, by which the negligent party is unaware of the results which may
follow from [its] act. But it may also arise where the negligent party has considered
the possible consequences carefully, and has exercised [its] own best judgment[;]
gross negligence as ―‗a failure to exercise even that care which a careless person would use‘ . . .
gross negligence is something more than negligence ‗and differs from ordinary negligence only
in degree, and not in kind‘‖; and willful conduct as where ―‗the actor has intentionally done an
act of an unreasonable character in disregard of a known or obvious risk that was so great as
to make it highly probable that harm would follow, and which thus is usually accompanied by
a conscious indifference to the consequences.‘‖ Id. at 464 (citing PROSSER & KEETON ON THE
LAW OF TORTS § 31, at 169, 212–13 (5th ed. 1984) (quoting RESTATEMENT (SECOND) OF TORTS
§§ 282, 500)).
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310 Albany Law Review [Vol. 75.1
observes that the failure to preserve or collect evidence ―resulting in
the loss or destruction of relevant information is surely negligent,
and, depending on the circumstances, may be grossly negligent or
willful.‖27
After defining the continuum of mental culpability in broad
stroke, Judge Scheindlin attempts to match the failure to complete
specific e-discovery tasks satisfactorily with the corresponding level
of culpability.28 In so doing, Judge Scheindlin creates a formulaic
approach to measuring mental culpability based on particular
actions and omissions of a party against whom spoliation is alleged.
Though attributing levels of mental culpability to specific e-
discovery failures is hardly a novel concept (and, indeed, something
that must be done to decide nearly every spoliation motion), no
court had previously attempted to define standardized criteria for
assigning culpability.29 In this respect alone, Pension Committee is
notable.
B. The Burden of Proving Spoliation
Before examining the discovery misconduct–to–scienter pairings
Judge Scheindlin defines, it is important to understand the
significance of her undertaking, and the effect of these pairings on
spoliation analysis. To succeed on a motion for severe sanctions,
such as an adverse inference jury instruction, it must generally be
proven that the spoliating party: (1) had control over the evidence;
(2) had a duty to preserve the evidence at the time it was destroyed;
(3) acted with a ―culpable state of mind;‖30 and (4) the missing
evidence is ―relevant‖ to the innocent party‘s claim or defense.31
The Second Circuit has provided guidance to define what
―relevance‖ means in the context of spoliation sanctions:
27 Id. at 464–65. 28 Id. 29 See, e.g., Reilly v. Natwest Mkts. Grp. Inc. 181 F.3d 253, 267–68 (2d Cir. 1999) (noting
that the Second Circuit uses a case-by-case approach to spoliation failures ―along a
continuum of fault‖) (quoting Welsh v. United States, 844 F.2d 1239, 1246 (6th Cir. 1988)). 30 In the Second Circuit, mere negligence is a sufficiently culpable state of mind for
imposition of an adverse inference instruction. See Residential Funding Corp. v. DeGeorge
Fin. Corp., 306 F.3d 99, 108 (2d Cir. 2002) (―The sanction of an adverse inference may be
appropriate in some cases involving the negligent destruction of evidence because each party
should bear the risk of its own negligence . . . . ‗[The sanction] should be available even for the
negligent destruction of documents if that is necessary to further the remedial purpose of the
inference. It makes little difference to the party victimized by the destruction of evidence
whether that act was done willfully or negligently.‘‖ (quoting Turner v. Hudson Transit Lines,
Inc., 142 F.R.D. 68, 75 (S.D.N.Y. 1991) (Francis, J.)). 31 Pension Committee, 685 F. Supp. 2d at 467.
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[O]ur cases make clear that ―relevant‖ in this context means
something more than sufficiently probative to satisfy Rule
401 of the Federal Rules of Evidence. Rather, the party
seeking an adverse inference must adduce sufficient
evidence from which a reasonable trier of fact could infer
that ―the destroyed or unavailable evidence would have been
of the nature alleged by the party affected by its
destruction.‖32
Judge Scheindlin notes carefully, however, that proof of relevance
is not enough (even when the Second Circuit‘s heightened relevancy
standard is applied). An innocent party must also ―show that the
evidence would have been helpful in proving its claims or
defenses—i.e., that the innocent party is prejudiced without that
evidence.‖33 Though relevance and prejudice are closely related
concepts, ―[p]roof of relevance does not necessarily equal proof of
prejudice.‖34 Generally, each must be proven independently
through extrinsic evidence.35
In practice, it can be quite difficult to establish the relevancy of
lost evidence and the prejudice resulting from its loss. It is often
impossible to know the content of lost documents; all that is known
is that some documents were or likely were lost. Proof of relevance
and prejudice must therefore come from inferences drawn from
existing documents, deposition testimony, or other corroborative
means. Likewise, it is equally difficult for the spoliating party to
disprove the relevancy of lost documents and the resulting
prejudice. For example, testimony of the spoliating party as to the
content of lost documents is patently self-serving and inherently
unreliable, requiring the spoliating party to draw inferences from
other evidence to disprove relevancy and prejudice.
Thus, we are faced with the foundational questions of fairness
framed by Judge Scheindlin, and others: ―Who then should bear the
burden of establishing the relevance of evidence that can no longer
be found? [W]ho should be required to prove that the absence of the
missing material has caused prejudice to the innocent party[?]‖36
The law in the Second Circuit is evolving to address these
32 Residential Funding, 306 F.3d at 108–09 (quoting Kronisch v. United States, 150 F.3d
112, 127 (2d Cir. 1998) and Byrnie v. Town of Cromwell, Bd. of Educ., 243 F.3d 93, 110 (2d
Cir. 2001)). 33 Pension Committee, 685 F. Supp. 2d at 467 (emphasis added). 34 Id. 35 Id. 36 Id. at 466–67.
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312 Albany Law Review [Vol. 75.1
questions. Although it has long been recognized that relevance may
be presumed, as a matter of law, when the spoliating party willfully
destroys evidence,37 courts have recently displayed a willingness to
consider extending this presumption where spoliation results from a
party‘s gross negligence.38 As with most evolutions in law,
inconsistent results have been reached along the way, even within
the same court.39
In Pension Committee, Judge Scheindlin takes a directive stance
on this issue, suggesting that a rebuttable presumption of both
relevance and prejudice should be applied almost as a matter of
course when spoliation results from gross negligence or willful
destruction.40
Where spoliation results from ordinary negligence, however, ―the
innocent party must prove both relevance and prejudice in order to
justify the imposition of a severe sanction.‖41 Considering the
burden an innocent party must overcome when confronted with
negligent spoliation of evidence, and the practical difficulties of so
37 Residential Funding, 306 F.3d at 109; Kronisch, 150 F.3d at 126 (―It is a well-
established and long-standing principle of law that a party‘s intentional destruction of
evidence relevant to proof of an issue at trial can support an inference that the evidence
would have been unfavorable to the party responsible for its destruction.‖). 38 Residential Funding, 306 F.3d at 109 (―[A] showing of gross negligence in the
destruction or untimely production of evidence will in some circumstances suffice, standing
alone, to support a finding that the evidence was unfavorable to the grossly negligent party.‖);
Toussie v. County of Suffolk, 2007 WL 4565160, at *8 (E.D.N.Y. 2007) (declining to presume
the relevance of information lost through grossly negligent spoliation, but recognizing that
―under certain circumstances a showing of gross negligence in the destruction or untimely
production of evidence will support a claim that the missing evidence was favorable to the
movant.‖) (internal citations and quotation marks omitted); Treppel v. Biovail, 249 F.R.D.
111, 121–22 (S.D.N.Y. 2008) (―While it is true that under certain circumstances ‗a showing of
gross negligence in the destruction or untimely production of evidence‘ will support [a
relevance] inference, the circumstances here do not warrant such a finding, as the defendants‘
conduct ‗does not rise to the egregious level seen in cases where relevance is determined as a
matter of law.‘‖) (quoting Residential Funding, 306 F.3d at 109 and Toussie, 2007 WL
4565160, at *8); In re NTL, Inc. Sec. Litig., 244 F.R.D. 179, 200 (S.D.N.Y. 2007) (holding that
the nonspoliating party was not required to submit extrinsic proof of relevance where the
spoliating party was grossly negligent); Orbit One Commc‘ns, Inc. v. Numerex Corp., 271
F.R.D. 429, 441 (S.D.N.Y. 2010) (―[U]nder certain circumstances a showing of gross
negligence in the destruction or untimely production of evidence will support [an inference
that the missing evidence was relevant] . . . [t]he conduct, however, must be egregious.‖)
(internal citations and quotation marks omitted). 39 Compare In re NTL, Inc. Sec. Litig., 244 F.R.D. at 179 (relevance was presumed by the
S.D.N.Y. due to the defendant‘s grossly negligent conduct in failing to implement an
appropriate litigation hold) with Toussie 2007 WL 4565160, at *8 (E.D.N.Y. 2007), Treppel,
249 F.R.D. at 121–22 (S.D.N.Y. 2008), and Orbit One, 271 F.R.D. at 441 (S.D.N.Y. 2010)
(holding in each case that relevance was not presumed where the spoliating party was grossly
negligent in failing to implement an appropriate litigation hold). 40 Pension Committee, 685 F. Supp. 2d at 468–69. 41 Id. at 468.
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doing, this rule appears to be in discord with basic notions of
fairness. Indeed, some argue that it should always be the spoliating
party who carries the burden of proving that the information was
not relevant, or that if it was, the innocent party was not prejudiced
by its loss.42 Judge Scheindlin recognizes this criticism:
While requiring the innocent party to demonstrate the
relevance of information that it can never review may seem
unfair, the party seeking relief has some obligation to make
a showing of relevance and eventually prejudice, lest
litigation become a ―gotcha‖ game rather than a full and fair
opportunity to air the merits of a dispute. If a presumption
of relevance and prejudice were awarded to every party who
can show that an adversary failed to produce any document,
even if such failure is completely inadvertent, the incentive
to find such error and capitalize on it would be
overwhelming. This would not be a good thing.43
In Pension Committee, Judge Scheindlin articulates a burden-
shifting protocol that she describes as ensuring ―no party‘s task is
too onerous or too lenient.‖44 That is, when the spoliating party‘s
conduct is ―sufficiently egregious‖ (i.e., grossly negligent or willful)
to justify a court‘s imposition of a presumption of relevance and
prejudice, the burden shifts to the spoliating party to rebut that
presumption.45 Otherwise, the innocent party carries the burden of
proving both relevance of the lost information and the prejudice it
suffers as a result of spoliation.46 In an attempt to soften the
burden placed on innocent parties, Judge Scheindlin cautions that
the innocent party must not be held ―to too strict a standard of proof
regarding the likely contents of the destroyed [or unavailable]
evidence,‘ because doing so ‗would . . . allow parties who have . . .
42 See, e.g., Jain v. Memphis Shelby Airport Auth., 2010 WL 711328, at *2 (W.D. Tenn.
Feb. 25, 2010) (―The spoliating party bears the burden of establishing lack of prejudice to the
opposing party, a burden the Sixth Circuit has described as an uphill battle.‖). 43 Pension Committee, 685 F. Supp. 2d at 468. Apart from considerations of fairness to the
parties, Judge Scheindlin‘s view appears to be heavily influenced by concerns of judicial
efficiency. See id. at 471 (―I note the risk that sanctions motions, which are very, very time
consuming, distracting, and expensive for the parties and the court, will be increasingly
sought by litigants. This, too, is not a good thing. For this reason alone, the most careful
consideration should be given before a court finds that a party has violated its duty to comply
with discovery obligations and deserves to be sanctioned.‖). Indeed, Judge Scheindlin notes
that she and two of her law clerks spent ―an inordinate amount of time on this motion. We
estimate that collectively we have spent close to three hundred hours resolving this motion.‖
Id. at 472 n.56. 44 Id. at 468. 45 Id. at 469. 46 Id. at 467–68.
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314 Albany Law Review [Vol. 75.1
destroyed evidence to profit from that destruction.‖47 Nevertheless,
one thing is clear—where the spoliating party acts willfully or is
grossly negligent, the innocent party has a much easier lift when
seeking severe sanctions and the spoliating party is burdened
significantly in having to rebut the presumptions of relevance and
prejudice.
C. Criteria For Finding Mere Negligence vs. Gross Negligence in the
Context of Discovery Misconduct
Understanding the practical significance of whether a party
accused of spoliation was merely negligent or grossly negligent in
failing to preserve or collect relevant documents, Judge Scheindlin‘s
discovery misconduct-to-scienter pairings can now be examined in
proper context. She first points to authority indicating that a party
acts with gross negligence, or even willfully in some circumstances,
if it: ―[fails] to issue a written litigation hold‖;48 ―[fails] to collect
information from the files of former employees that remain in [its]
possession, custody, or control after the duty to preserve has
attached‖;49 ―[fails] to collect records—either paper or electronic—
from key players‖;50 or ―[destroys] e-mail or certain backup tapes
after the duty to preserve has attached.‖51
On the other hand, a party acts with mere negligence if it fails to
obtain records from every employee who had any involvement with
the issues raised in the litigation (as opposed to just the ―key
players‖), or if it fails to take all appropriate measures to preserve
relevant electronic records.52
Pension Committee makes it clear that ―at the end of the day the
judgment call of whether to award sanctions is inherently
subjective.‖53 Judge Scheindlin observes that it would be helpful for
courts to have available a list of criteria that should be considered
in evaluating discovery misconduct, even though ―these inquiries
are inherently fact intensive and must be reviewed case by case.‖54
She then provides her guidance on specific discovery failings that in
her opinion equate to gross negligence:
47 Id. at 468 (internal citations and quotation marks omitted). 48 Id. at 488. 49 Id. at 465. 50 Id. 51 Id. 52 Id. 53 Id. at 471. 54 Id.
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After a discovery duty is well established, the failure to
adhere to contemporary standards can be considered gross
negligence. Thus, after the final relevant Zubulake opinion
in July, 2004, the following failures support a finding of
gross negligence, when the duty to preserve has attached: to
issue a written litigation hold; to identify all of the key
players and to ensure that their electronic and paper records
are preserved; to cease the deletion of e-mail or to preserve
the records of former employees that are in a party‘s
possession, custody, or control; and to preserve backup tapes
when they are the sole source of relevant information or
when they relate to key players, if the relevant information
maintained by those players is not obtainable from readily
accessible sources.55
D. Applying the Law to the Pension Committee Plaintiffs
The most significant flaw shared by all thirteen of the plaintiffs
targeted by the defendant‘s spoliation motion was that none
instituted a written litigation hold until 2007—four years after the
duty to preserve relevant evidence was triggered.56 Shortly after
being retained in 2003, the plaintiffs‘ counsel contacted the
plaintiffs by telephone and e-mail to request that they produce
copies of certain documents that were needed to draft the
complaint.57 Plaintiffs‘ counsel then distributed memoranda
instructing the plaintiffs to be over, rather than under, inclusive,
and noting that e-mails and other electronic documents should be
included in the production.58 Moreover, counsel sent the plaintiffs
monthly case status memoranda, which included additional
requests for relevant documents, including electronic documents.59
Judge Scheindlin held that the e-mails and memoranda
distributed by counsel failed to meet the standard for a suitable
written litigation hold because they: (1) ―[did] not direct employees
to preserve all relevant records‖; (2) ―[did not] create a mechanism
for collecting the preserved records so that they can be searched by
someone other than the employee‖; (3) ―place[d] total reliance on the
employee to search and select what that employee believed to be
55 Id. (emphasis added). 56 Id. at 476. 57 Id. at 473. 58 Id. 59 Id.
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responsive records without any supervision from Counsel‖; and (4)
―never specifically instructed plaintiffs not to destroy records so that
Counsel could monitor the collection and production of
documents.‖60
In examining the plaintiffs‘ level of culpability, Judge Scheindlin
noted that it was important to analyze the plaintiffs‘ conduct in
light of evolving e-discovery laws.61 For example, although Judge
Scheindlin believes that the requirement to institute a written
litigation hold was clearly established in the Southern District of
New York by the middle of 2004—after Zubulake V—neither the
Southern District of Florida (where Pension Committee was filed in
2003), nor any other court in the Eleventh Circuit had articulated a
litigation hold requirement until 2007.62 Therefore, the plaintiffs
were not required, as a matter of law, to institute a written
litigation hold until the case was transferred to the Southern
District of New York in 2005.63
Accordingly, Pension Committee distinguishes the plaintiffs‘ pre-
2005 conduct from their conduct occurring after 2005.64 Judge
Scheindlin held that, although the failure to institute a written
litigation hold in 2005 was, at a minimum, grossly negligent, the
defendants failed to demonstrate that any documents were actually
destroyed after 2005. Indeed, Judge Scheindlin notes, ―[i]t is likely
that most of the evidence was lost before 2005 due to the failure to
institute written litigation holds.‖65
As a result of the relatively unsettled law in the early years of the
Pension Committee controversy, Judge Scheindlin held that the
plaintiffs‘ failure to institute timely written litigation holds,
standing alone, did not demonstrate gross negligence.66 Instead,
she looked to any additional errors made during discovery to
determine whether the plaintiffs‘ conduct was merely negligent or
grossly negligent.67 Given the complexity of this securities case and
60 Id. 61 Id. at 475–76. 62 Id. at 476–77. 63 Id. at 477 (―The failure to [issue a written legal hold] as of that date was, at a minimum,
grossly negligent.‖). 64 Id. at 476. 65 Id. 66 Id. at 489 n.179 (―I reach this conclusion, in part, because once the duty to institute a
litigation hold was clearly established—when the case was transferred to this District in
2005, it is very likely that electronic records that existed in 2003 would have been lost or
destroyed. Thus, instituting the litigation hold in 2005 instead of 2007 may not have made
any difference.‖). 67 Id. at 479–96.
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the heterogeneous group of plaintiffs, the court examined the
preservation efforts of each plaintiff.68 Overall, six plaintiffs were
deemed grossly negligent, and the remaining seven were deemed
ordinarily negligent.69
Those plaintiffs found to be grossly negligent had failed to issue a
written litigation hold prior to 2007; continued to delete relevant
documents after the duty to preserve arose; failed to request
documents from key players; delegated search efforts without any
supervision from management; destroyed backup tapes containing
documents relating to key players that were not otherwise
available; and/or submitted misleading or inaccurate declarations.70
Thus, Judge Scheindlin held that ―[f]rom this conduct, it is fair to
presume that responsive documents were lost or destroyed. The
relevance of any destroyed documents and the prejudice caused by
their loss may also be presumed.‖71 The court held that the
defendants were able to show that unknown, yet presumptively
relevant documents, were destroyed due to poor preservation and
the lack of an effective litigation hold.72
The latter group of plaintiffs were found to be merely negligent
―after careful consideration‖73 because use of a written litigation
hold ―was not yet generally required‖74 in early 2004 in federal court
in Florida. As a result, failure to issue a litigation hold alone was
insufficient to constitute gross negligence, absent additional
discovery violations.75
The opinion included a detailed spoliation instruction to provide
the jury with information about the spoliation caused by the
―grossly negligent‖ plaintiffs.76 For the ordinarily negligent
plaintiffs, the defendants were required to demonstrate both the
relevance of the unknown missing documents, and that they were
prejudiced by the missing documents.77
68 See id. 69 See id. at 477, 479, 488. 70 Id. at 479. 71 Id. 72 Id. at 477. The plaintiffs argued that it was absurd for them to be held responsible for
an allegedly missing class of unknown documents. The Court disagreed, holding that ―[t]he
paucity of records produced by some plaintiffs and the admitted failure to preserve some
records or search at all for others by all plaintiffs leads inexorably to the conclusion that
relevant records have been lost or destroyed.‖ Id. at 476. 73 Id. at 488. 74 Id. 75 Id. at 489. 76 Id. at 496. 77 Id. at 478. Monetary sanctions were also imposed against all thirteen plaintiffs. Id. at
497. The Court awarded reasonable costs to the defendants, including attorneys‘ fees
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III. THE IMPACT (AND CRITICISM) OF PENSION COMMITTEE
Pension Committee, like Zubulake, has and will continue to
impact the national landscape of discovery law. Like Zubulake, it
has also provoked sharp criticism and debate from jurists, scholars,
and practitioners.
In particular, Judge Scheindlin does two things in Pension
Committee that spark debate: (1) she creates a per se rule that
failure to institute a written litigation hold constitutes gross
negligence, and (2) she holds that a spoliating party‘s gross
negligence may, and often will, presumptively establish relevance
and prejudice in the context of awarding severe sanctions.
Moreover, Pension Committee, and its subsequent criticism and
debate, highlight the tremendous inconsistencies from jurisdiction-
to-jurisdiction (and even within jurisdictions) in how courts analyze
spoliation issues and levy sanctions.
A. The Requirement That Litigation Holds Be In Writing
One brief sentence in Pension Committee, more than any other
aspect of Judge Scheindlin‘s eighty-eight-page scholarly analysis,
has garnered the close attention of many: ―the failure to issue a
written litigation hold constitutes gross negligence because that
failure is likely to result in the destruction of relevant
information.‖78
Many courts before and after Pension Committee agree that the
failure to implement a litigation hold may, by itself, constitute gross
negligence, but Judge Scheindlin was the first to require explicitly
that the hold be in writing.79 Several courts—the majority of which
are in and around New York‘s Southern District—have chosen to
associated with bringing the motion, deposing the declarants and reviewing the plaintiffs‘
declarations. Id. 78 Id. at 465. 79 See Crown Castle USA Inc. v. Fred A. Nudd Corp., 2010 WL 1286366, at *13 (W.D.N.Y.
Mar. 31, 2010) (holding that the plaintiff‘s failure to institute any form of litigation hold,
orally or in writing, supported a finding that the loss of key a employee‘s e-mails resulted
from the plaintiff‘s gross negligence); Richard Green (Fine Paintings) v. McClendon, 262
F.R.D. 284, 290 (S.D.N.Y. 2009) (―[T]he failure to implement a litigation hold is, by itself,
considered grossly negligent behavior.‖); Chan v. Triple 8 Palace, Inc., 2005 WL 1925579, at
*7 (S.D.N.Y. Aug. 11, 2005) (―[T]he utter failure to establish any form of litigation hold at the
outset of litigation is grossly negligent.‖); Toussie, 2007 WL 4565160, at *8; Pandora Jewelry,
LLC v. Chamilia, LLC, 2008 WL 4533902, at *8–9 (D. Md. 2008) (concluding that it was
grossly negligent of the defendants to exchange servers during litigation and to fail to
institute a litigation hold even though their e-mails were automatically archived or deleted
after ninety days).
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adopt Judge Scheindlin‘s per se rule that failure to institute a
written litigation hold equals gross negligence.80
Other courts following Pension Committee have subtlety
questioned the proprietary of an automatic per se rule. For
instance, in Merck Eprova AG v. Gnosis S.P.A., Judge Sullivan
(S.D.N.Y.) refers deferentially to Pension Committee (―The Court
agrees with the analytical framework set forth in [Pension
Committee] and will rely on it here.‖).81 Then, in evaluating
whether the defendants‘ discovery efforts complied with acceptable
standards of conduct, the court—citing Pension Committee—
observed that ―[o]ne such standard that has emerged requires
parties to . . . issue written litigation holds once litigation is
reasonably anticipated.‖82
But, Judge Sullivan does not blindly endorse Pension Committee‘s
per se rule. He leaves open the possibility that oral litigation holds
might be acceptable:
In this case, there is no doubt that Defendants failed to issue
a written litigation hold. Even assuming arguendo that
there might be circumstances in which a nonwritten
litigation hold could suffice—for example, when the party,
like Gnosis, is a small company whose intra-office
communications are primarily oral—it is clear that
Defendants made no significant effort to ensure the
preservation of relevant documents.83
Similarly, Magistrate Judge Goodman of the U.S. District Court
for the Southern District of Florida has questioned the
80 See PassLogix, Inc. v. 2FA Tech., LLC, 708 F. Supp. 2d 378, 410 (S.D.N.Y. 2008)
(holding that the defendant acted with gross negligence when it deleted relevant e-mail in the
absence of a written litigation hold and observing that ―[o]nce on notice of litigation, the
failure to issue a written litigation hold constitutes gross negligence because that failure is
likely to result in the destruction of relevant information.‖) (internal citations and quotation
marks omitted); Philips Elecs. North America Corp. v. BC Technical, 773 F. Supp. 2d 1149 (D.
Utah 2011) (―Under current law, the failure to issue a written litigation hold constituted gross
negligence because it was likely to result in destruction of relevant information.‖);
Zimmerman v. Poly Prep Country Day Sch., 2011 WL 1429221, at *22 (E.D.N.Y. Apr. 13,
2011); Chen v. LW Rest., Inc., 2011 WL 3420433, at *11 (E.D.N.Y. 2011) (holding that severe
sanctions were warranted and observing that ―[n]ot only does it appear that counsel failed to
issue a written litigation hold, but he appears to have not issued a hold of any kind.‖);
Williams v. N.Y.C. Transit Auth., 2011 WL 5024280, at *7 (E.D.N.Y. 2011); N.V.E., Inc. v.
Palmeroni, 2011 WL 4407428, at *5 (D.N.J. 2011) (―Here, the Court finds that NVE acted
with gross negligence in both failure to preserve evidence and collection and review. As to
preservation, NVE‘s counsel failed to institute a litigation hold . . . and admits that it failed to
issue a written litigation hold.‖) (internal citations omitted). 81 Merck Eprova AG v. Gnosis S.P.A., 2010 WL 1631519, at *4 (S.D.N.Y. Apr. 20, 2010). 82 Id. 83 Id. at *5.
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appropriateness of adopting a rule that assigns heightened
culpability automatically if a written hold is not implemented:
[W]hile this Court may consider the absence of a written
litigation hold in evaluating a claim of bad faith in the
spoliation context, the inquiry does not end with a finding
that no formal written litigation hold was issued. Indeed,
courts in this Circuit do not equate an oral litigation hold
with bad faith.84
Leaving subtlety behind, a few district court judges (including
some influential e-discovery jurists in their own right) have
expressed outright disagreement with Pension Committee‘s
requirement that litigation holds be in writing to avoid an
automatic finding of gross negligence. For instance, Magistrate
Judge Paul Grimm of the District of Maryland notes that it might
not always be necessary to implement a litigation hold—much less a
written one—and that the reasonableness of a party‘s preservation
efforts should be the prevailing consideration.85
Despite the holding of Pension Committee, there is no authority
from the Second Circuit or any other Circuit Court of Appeals that a
litigation hold must be in writing.86 Thus, numerous courts
(including Judge Scheindlin‘s own court) have openly and
completely disagreed with Pension Committee‘s per se rule that
litigation holds be in writing, to avoid an automatic finding of gross
negligence.87
84 Point Blank Solutions, Inc. v. Toyobo Am., Inc., 2011 WL 1456029, at *29 (S.D. Fla. Apr.
5, 2011). Judge Goodman correctly observed that in the Eleventh Circuit sanctions for
discovery misconduct are unavailable absent a finding of bad faith. Id. at 28. Therefore,
application of Pension Committee litigation hold rule was examined within the context of
measuring bad faith, not gross negligence. See id. at 28–32. 85 Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 524 (D. Md. 2010) [hereinafter
Victor Stanley II] (citing Jones v. Bremen High Sch. Dist., 2010 WL 2106640, at *7 (N.D. Ill.
May 25, 2010) and Thomas Y. Allman, AMENDING THE FEDERAL RULES: THE PATH TO AN
EFFECTIVE DUTY TO PRESERVE (2010 Conf. on Civil Litig., June 15, 2010),
http://civilconference.uscourts.gov/LotusQuickr/dcc/Main.nsf/h_Toc/47B91A2AC603E0340525
670800167201/?OpenDocument) (copy on file with Albany Law Review) (―[I]f a litigation hold
process is employed, that fact should be treated as prima facie evidence that reasonable steps
were undertaken to notify relevant custodians of preservation obligations.‖). 86 Steuben Foods, Inc. v. Country Gourmet Foods, LLC, 2011 WL 1549450, at *5 (W.D.N.Y.
Apr. 21, 2011). 87 Id. at *5 (―Thus, this court is not obliged to follow the holding of Pension Committee as to
its finding of a requirement of a written litigation hold . . . . Accordingly, the court in this case
declines to hold that implementation of a written litigation hold notice is required in order to
avoid an inference that relevant evidence has been presumptively destroyed by the party
failing to implement such written litigation hold.‖); Surowiec v. Capital Title Agency, Inc.,
790 F. Supp. 2d 997, 1007 (D. Ariz. 2011) (―The Court disagrees with Pension Committee‘s
holding that a failure to issue a litigation hold constitutes gross negligence per se. Per se
rules are too inflexible for this factually complex area of the law where a wide variety of
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In Orbit One Communications, Inc. v. Numerex Corp.,88
Magistrate Judge Francis (who presides alongside Judge
Scheindlin) notes that Pension Committee‘s written litigation hold
requirement is too inflexible, and may result in too great an
emphasis on the spoliating party‘s conduct and too little on whether
information relevant to discovery was actually lost. Judge Francis
writes:
[T]he failure to [institute a written litigation hold] does not
necessarily constitute negligence, and certainly does not
warrant sanctions if no relevant information is lost. For
instance, in a small enterprise, issuing a written litigation
hold may not only be unnecessary, but it could be
counterproductive, since such a hold would likely be more
general and less tailored to individual records custodians
than oral directives could be. Indeed, under some
circumstances, a formal litigation hold may not be necessary
at all.89
Thus, Judge Francis, Judge Grimm, and others imagine
circumstances where exceptions to the use of a written litigation
hold should apply. Pension Committee offers no such flexibility.
Without question, use of a written litigation hold is a good (if not
best) practice, and one that should be followed in the vast majority
of cases.90 But, to hold that use of oral notice is always an exercise
of gross negligence, without regard to the sufficiency of oral
instructions vis-à-vis written ones, or how effective oral delivery
might be in certain circumstances, probably is too stringent a rule
that ignores the everyday realities of litigation practice.
circumstances may lead to spoliation accusations. An allegedly spoliating party‘s culpability
must be determined case-by-case.‖); Orbit One Commc‘ns, Inc. v. Numerex Corp., 271 F.R.D.
429, 441 (S.D.N.Y. 2010); Sampson v. City of Cambridge, Maryland, 251 F.R.D. 172, 181–82
(D. Md. 2008) (holding that the defendant was negligent, but not grossly negligent, when it
failed to implement a written litigation hold but had instructed the employees most involved
in the litigation to retain documents); Jones, 2010 WL 2106640, at *7 (failure to implement a
written litigation hold is not negligence per se; reasonableness must be considered); Haynes v.
Dart, 2010 WL 140387, at *4 (N.D. Ill. Jan. 11, 2010) (―The failure to institute a document
retention policy, in the form of a litigation hold, is relevant to the court‘s consideration, but it
is not per se evidence of sanctionable conduct.‖). 88 Orbit One, 271 F.R.D. at 429. 89 Id. at 441. 90 See THE SEDONA CONFERENCE COMMENTARY ON LEGAL HOLDS: THE TRIGGER AND THE
PROCESS, at 12 (August 2007), http://www.thesedonaconference.org/content/miscFiles/
Legal_holds.pdf (―When a duty to preserve arises, reasonable steps should be taken to
identify and preserve relevant information as soon as is practicable. Depending on the
circumstances, a written legal hold (including a preservation notice to persons likely to have
relevant information) should be issued.‖(emphasis added)).
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If nothing else, Judge Francis‘s Orbit One opinion is an
alternative perspective from the Southern District of New York—
arguably the epicenter of e-discovery among the federal judiciary—
and may offer a counterbalance to Pension Committee. This is small
comfort to potential litigants and their counsel, however, because
the judge assigned to each case will dictate how spoliation issues
are decided. Thus, the safest course in planning discovery efforts
and assessing the risk of sanctions is to apply the strictest standard,
which right now is Judge Scheindlin‘s.
One implication of Pension Committee then is that if counsel were
to provide comprehensive and readily-understandable litigation
hold instructions to a client orally, and should some spoliation of
evidence nevertheless occur or at least be alleged, the failure to
reduce those litigation hold instructions to writing amounts to gross
negligence (which, in turn, gives rise to presumptions of relevance
and prejudice that the spoliating party must rebut). Moreover, if
counsel communicates oral litigation hold instructions to its client,
and then puts those instructions in writing, gross negligence may be
found if the written instructions are not delivered in as timely a
fashion as some future court might deem necessary. The relative
timing of oral and written instructions is an important
consideration; delivery of oral litigation hold instructions may be
viewed as an acknowledgement that the duty to preserve was
triggered at that time. Absent an immediate written litigation hold
once the duty to preserve is triggered, a party is at risk of being
labeled grossly negligent. Thus, counsel is effectively
disincentivized to provide oral hold instructions unless a written
hold is simultaneously available, even though oral notice may be
more timely and effective.
Pension Committee‘s unfortunate focus on written litigation holds
may place too much emphasis on documentation and not enough on
process. Stated differently, Pension Committee may inadvertently
promote form over substance. Hold directives that fail to
communicate specific, relevant, and defensible steps for custodians
to follow are merely documentation for the sake of documentation.
To be sure, Judge Scheindlin and others will continue to measure
culpability by the reasonableness of a party‘s efforts, and won‘t be
satisfied simply because a litigation hold directive is in writing; its
substantive content must still satisfy all the foundational
requirements of an effective litigation hold notice.
B. The Rebuttable Presumptions of Relevance and Prejudice Where
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Spoliation Results From Gross Negligence
According to Pension Committee, if a party accused of spoliation
acts in a grossly negligent or willful manner then a court may (and,
according to Judge Scheindlin, often will) presume that for purposes
of imposing severe sanctions the lost evidence was relevant, and
that the non-spoliating party was prejudiced by its loss. Although
Pension Committee is framed as a restatement of Zubulake in many
respects, on this issue Judge Scheindlin substantially extends the
narrow presumption she expressed in Zubulake V:
When evidence is destroyed in bad faith (i.e. intentionally or
willfully), that fact alone is sufficient to demonstrate
relevance. By contrast, when the destruction is negligent,
relevance must be proven by the party seeking the
sanctions. . . . [This requirement] is even more necessary
where the destruction was merely negligent, since in those
cases it cannot be inferred from the conduct of the spoliator
that the evidence would even have been harmful to him.
This is equally true in cases of gross negligence or
recklessness; only in the case of willful spoliation is the
spoliator‘s mental culpability itself evidence of the relevance
of the documents destroyed.91
First, Zubulake did not allow for a presumption of relevance
where spoliation was the result of gross negligence. Second,
although Zubulake addressed a presumption of relevance, it did not
address a presumption of prejudice. In fact, Judge Scheindlin does
not discuss the requirement that prejudice be proven in any of her
relevant Zubulake rulings.
Interestingly, Pension Committee cites five cases for the
proposition that ―many courts in this district presume relevance
where there is a finding of gross negligence,‖92 but only one of the
five cases cited actually made that presumption.93 Indeed, the other
four cases mention only that ―under certain circumstances‖ gross
91 Zubulake V, 229 F.R.D. 422, 431 (S.D.N.Y. 2004). 92 Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec. LLC, 685 F.
Supp. 2d 456, 467 (S.D.N.Y. 2010) (citing Residential Funding Corp. v. DeGeorge Fin. Corp.,
306 F.3d 99, 109 (2d Cir. 2002); Treppel v. Biovail, 249 F.R.D. 111, 121–22 (S.D.N.Y. 2008);
Toussie v. County of Suffolk, 2007 WL 4565160, at *8 (E.D.N.Y. Dec. 21, 2007); Zubulake IV,
220 F.R.D. 212, 221 (S.D.N.Y. 2003); and In re NTL, Inc. Sec. Litig., 244 F.R.D. 179, 200
(S.D.N.Y. 2007)). 93 See In re NTL, Inc. Sec. Litig., 244 F.R.D. at 200 (holding that the nonspoliating party
was not required to submit extrinsic proof of relevance where the spoliating party was grossly
negligent).
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negligence may be sufficient to presume relevance, and in each case
the presumption was not made because the spoliating party‘s gross
negligence did not rise to ―the egregious level seen in cases where
relevance is determined as a matter of law.‖94
In fashioning the burden-shifting protocol designed to balance the
competing interests and burdens of spoliating and innocent parties,
Pension Committee builds upon the fiction that ―many courts in this
district presume relevance where there is gross negligence.‖95 But,
as Judge Francis notes in Orbit One, there must be truly egregious
conduct for this presumption to be made—generally something
more than failure to implement a litigation hold or other indicia of
gross negligence vis-à-vis bad faith.96
Thus, Pension Committee has morphed the long-standing
rebuttable presumption of relevance into a legal doctrine that is
disconnected from its foundational purpose. At the roots of this
presumption lies the rationale that the relevance of destroyed
information can be inferred from its willful spoliation.97 Stated
differently, why would someone purposefully destroy information
while under a duty to preserve it and put himself at risk of
sanctions for doing so, unless that information was sufficiently
harmful to him? The logic of this rationale does not extend to
grossly negligent spoliation, and, in fact, no court outside of the
Second Circuit has held that gross negligence is sufficient to
presume relevance.
Judge Grimm notes the logical disconnect between the
foundational purpose of the relevance/prejudice presumption, and
negligent spoliation:
[C]ertain sanctions make no logical sense when applied to
particular breaches of the duty to preserve. For example, an
adverse inference instruction makes little logical sense if
given as a sanction for negligent breach of the duty to
preserve, because the inference that a party failed to
94 Treppel, 249 F.R.D. at 121–22 (quoting Toussie, 2007 WL 4565160, at *8). 95 Pension Comm., 685 F. Supp. 2d at 468. 96 Orbit One Commc‘ns, Inc. v. Numerex Corp., 271 F.R.D. 429, 439 (S.D.N.Y. 2010)
(Francis, J); see, e.g., Zimmerman v. Poly Prep Country Day Sch., 2011 WL 1429221, at *24
(E.D.N.Y. Apr. 13, 2011) (declining to presume relevance despite the defendant‘s gross
negligence in failing to institute a litigation hold); Toussie, 2007 WL 4565160, at *8 (declining
to presume relevance or award adverse inference instruction even though the defendant
failed to implement a litigation hold); Cordius Trust v. Kummerfeld, 2008 WL 113664, at *4
(S.D.N.Y. Jan. 11, 2008) (stating that defendant‘s ―long-term and purposeful evasion of
discovery requests,‖ standing alone, was sufficient to support a finding of relevance for
purpose of imposing sanctions). 97 See Zubulake V, 229 F.R.D. at 431.
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preserve evidence because it believed that the evidence was
harmful to its case does not flow from [negligence] . . . . The
more logical inference is that the party was disorganized, or
distracted, or technically challenged, or overextended, not
that it failed to preserve evidence because of an awareness
that it was harmful.98
In Rimkus Consulting Group, Inc. v. Cammarata, the court
declined to follow Pension Committee‘s approach of presuming
relevance and prejudice when the spoliating party is grossly
negligent, noting that requiring ―a showing that the lost
information is relevant and prejudicial is an important check on
spoliation allegations and sanctions motions.‖99 As Judge Rosenthal
noted in Rimkus, ―[t]he Fifth Circuit has not explicitly addressed
whether even bad-faith destruction of evidence allows a court to
presume that the destroyed evidence was relevant or its loss
prejudicial,‖ and that ―[c]ase law in the Fifth Circuit indicates that
an adverse inference instruction is not proper unless there is a
showing that the spoliated evidence would have been relevant.‖100
Accordingly, Rimkus held that a ―severe sanction such as a default
judgment or an adverse inference instruction requires bad faith and
prejudice,‖ and that only a ―jury may draw an adverse inference
‗that party who intentionally destroys important evidence in bad
faith did so because the contents of those documents were
unfavorable to that party.‘‖101
Courts in the Fourth,102 Sixth,103 and Seventh104 Circuits have
similarly held that grossly negligent spoliation is insufficient to
presume relevance or prejudice. This issue has not yet been
98 Victor Stanley II, 269 F.R.D. 497, 526 (D. Md. 2010). 99 Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 2d 598, 616 (S.D. Tex. 2010).
Rimkus also made clear, however, that where ―the evidence in the case as a whole would
allow a reasonable fact finder to conclude that the missing evidence would have helped the
requesting party support is claims or defenses, that may be a sufficient showing of both
relevance and prejudice to make [sanctions] appropriate.‖ Id. at 617. 100 Id. at 617. 101 Id. at 642–43 (quoting Russell v. Univ. of Tex. of the Permian Basin, 234 F. App‘x 195,
207 (5th Cir. 2007) (emphasis added)). 102 Sampson v. City of Cambridge, Maryland, 251 F.R.D. 172, 179 (D. Md. 2008). In the
Fourth Circuit, only willful spoliation is sufficient to establish a rebuttable presumption of
relevance. See id. 103 Jain v. Memphis Shelby Airport Auth., 2010 WL 711328, at *2 (W.D. Tenn. Feb. 25,
2010) (―The spoliating party bears the burden of establishing lack of prejudice to the opposing
party, a burden the Sixth Circuit has described as an uphill battle.‖). 104 In re Kmart Corp., 371 B.R. 823, 853–54 (Bankr. N.D. Ill. 2007) (noting that in the
Seventh Circuit proof of bad faith spoliation is required to impose a rebuttable presumption of
relevance).
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addressed by courts in the First, Third, Eighth, Ninth, Tenth,
Eleventh, or D.C. Circuits.105
Accordingly, a nationwide survey of spoliation law reveals that
the possibility of imposing a rebuttable presumption of relevance
and prejudice for grossly negligent spoliation exists only in the
courts of the Second Circuit. It is further revealed that among those
courts, only Pension Committee creates a rebuttable presumption of
prejudice; other courts in the Second Circuit (including Judge
Scheindlin in Zubulake V) have established only a presumption of
relevance without mention of prejudice. Moreover, courts in the
Second Circuit (again, including Judge Scheindlin in Zubulake V)
have historically reserved this presumption for cases involving
willful or other ―sufficiently egregious‖ spoliation, not gross
negligence. All of this leads to the inevitable conclusion that in the
context of spoliation sanctions, Pension Committee establishes the
most aggressive rebuttable presumption in the country—just like it
establishes the strictest litigation hold standard.
Without question, the law of e-discovery is in its adolescence.
Spoliation rules will evolve as the era of e-discovery progresses, but
it is highly questionable whether the burden-shifting protocol
articulated in Pension Committee will be the prevailing standard
once the dust settles. Among the courts that have examined the
issue of presumptive relevance and prejudice in the context of
severe sanctions, the implication is that Pension Committee swings
the pendulum too far in favor of parties seeking the imposition of
severe sanctions—particularly because Judge Scheindlin provides a
menu of specific conduct that presumptively constitutes gross
negligence (e.g., failure to implement a written litigation hold,
failure to identify all key custodians, or failure to collect [not just
preserve] records from key custodians). Thus, a check-the-box
approach may be followed in the event that a party commits one of
the enumerated acts of gross negligence within the formulaic
roadmap of Pension Committee, the innocent party is strongly
incentivized to bring a spoliation motion because the burden rests
entirely upon the alleged spoliator to disprove relevance and
prejudice, rather than upon the party bringing the motion to prove
these elements. Coincidentally, this may result in realization of
Judge Scheindlin‘s pronounced fear—that litigation turns in a
―gotcha‖ game focused more on ancillary strategic attacks (like
spoliation) than the merits of the actual controversies before
105 See Victor Stanley II, 269 F.R.D. 497, 542–53 (D. Md. 2010).
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courts.106
C. The Fallout From Pension Committee Highlights the Lack of
National Consistency on Issues of Spoliation
As noted and reinforced in Pension Committee, mere negligence is
a sufficiently ―culpable state of mind‖ in the Second Circuit to
warrant imposition of the severe sanction of an adverse inference
jury instruction.107 The Second Circuit does not stand alone in this
regard, but a review of national case law reveals a substantial
divide among the federal judiciary.108
Like the Second Circuit, ordinary negligence is a sufficiently
culpable state of mind for imposition of an adverse inference jury
instruction in the First,109 Third,110 Sixth,111 Tenth,112 and D.C.113
Circuits. Conversely, willful or bad faith spoliation is required for
imposition of an adverse inference instruction in the Fourth,114
Fifth,115 Seventh,116 Ninth,117 and Eleventh 118 Circuits. Courts in
106 Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, 685 F.
Supp. 2d 456, 468 (S.D.N.Y. 2010). 107 Id. at 467–68. 108 See Victor Stanley II, 269 F.R.D. at 542–53 (Judge Grimm provides an appendix
charting the approach of each federal circuit in deciding spoliation motions). 109 Trull v. Volkswagen of Am., Inc., 187 F.3d 88, 95 (1st Cir. 1999); Oxley v. Penobscot
County, 2010 WL 3154975, at *1 (D. Me. Aug. 9, 2010) (holding that imposition of an adverse
inference instruction ―does not require bad faith or comparable bad motive‖) (internal citation
and quotation marks omitted). 110 Canton v. Kmart Corp., 2009 WL 2058908, at *2–3 (D.V.I. July 13, 2009). 111 Miller v. Home Depot USA, Inc., 2010 WL 373860, at *1 (M.D. Tenn. Jan. 28, 2010);
Jain v. Memphis Shelby Cnty. Airport Auth., 2010 WL 711328, at *3 (W.D. Tenn. Feb. 25,
2010); Forest Labs., Inc. v. Caraco Pharm. Labs., Ltd., 2009 WL 998402, at *5–6 (E.D. Mich.
Apr. 14, 2009). 112 Hatfield v. Wal-Mart Stores, Inc., 335 F. App‘x 796, 804 (10th Cir. 2009) (holding that
neither bad faith nor intentionality is required for an adverse inference instruction);
Schrieber v. Fed. Ex. Corp., 2010 WL 1078463 (N.D. Okla. Mar. 18, 2010). 113 D‘Onofrio v. SFX Sports Grp., Inc., 2010 WL 3324964, at *10 (D.D.C. Aug. 24, 2010)
(noting that an adverse inference instruction may be imposed for mere negligence where ―the
interests in righting the evidentiary balance and in the deterring of others trumps the lacuna
that a logician would detect in the logic of giving such an instruction.‖). 114 Goodman v. Praxair Servs., Inc., 632 F. Supp. 2d 494, 519 (D. Md. 2009) (―[A] court
must only find that spoliator acted willfully in the destruction of evidence.‖). 115 Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 2d 598, 615 (S.D. Tex. 2010). 116 Faas v. Sears, Roebuck & Co., 532 F.3d 633, 644 (7th Cir. 2008). 117 Karnazes v. County of San Mateo, 2010 WL 2672003, at *2 (N.D. Cal. July 2, 2010)
(holding that bad faith or grossly negligent spoliation is required for imposition of an adverse
inference instruction). 118 Point Blank Solutions, Inc. v. Toyobo Am., Inc., 2011 WL 1456029, at *9 (―A party‘s
failure to preserve evidence rises to the level of sanctionable spoliation in this Circuit only
where the absence of that evidence is predicated on bad faith, such as where a party
purposely tampers with the evidence.‖) (internal citations and quotation marks omitted);
Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998) (―The key to unlocking a court‘s
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328 Albany Law Review [Vol. 75.1
the Eighth Circuit take a hybrid approach, under which mere
negligence is sufficient for imposition of an adverse inference
instruction for ―the ongoing destruction of records during litigation
and discovery,‖119 but evidence of bad faith is required if spoliation
occurs prior to litigation.120
Attention to this sharp divide on such a foundational element of
spoliation law is a natural outgrowth of the debates that Pension
Committee has triggered. Indeed, some leaders in judicial thought
have recently expressed their view that emphasis on culpability is
misplaced and, in determining sanctions, courts should focus not on
the degree of fault by the spoliating party, but on the degree of
prejudice to the innocent party.121 Presently though, the prevailing
majority rule is that mere negligence is sufficient for the imposition
of an adverse inference jury instruction. The variety of standards
employed by courts throughout the nation, and the lack of a uniform
or consistent approach on issues of culpability and burden of proof,
diminish the predictability of the risks and consequences of
spoliation (especially for cross-jurisdictional entities), and cause
great concern for litigants and counsel who are trying to determine
what they must do to comply with contemporary e-discovery
standards.
IV. FINAL THOUGHTS
Stepping away from the particular facts and holdings of Pension
Committee, Judge Scheindlin‘s opinion is perhaps most notable for
the way in which it has galvanized dialogue and debate on three
foundational issues impacting litigation in every court:
1. the criteria for evaluating whether certain discovery failings
constitute ordinary negligence, gross negligence, or willfulness;
2. the interplay between a spoliating party‘s mental culpability
and the burden of proving (or disproving) the elements required for
imposition of severe sanctions; and
inherent power [to impose sanctions for discovery abuses] is a finding of bad faith.‖); Penalty
Kick Mgmt. Ltd. v. Coca Cola Co., 318 F.3d 1284, 1294 (11th Cir. 2003); Managed Care
Solutions, Inc. v. Essent Healthcare, Inc., 2010 WL 3368654, at *13 (S.D. Fla. Aug. 23, 2010). 119 Stevenson v. Union Pac. R.R., 354 F.3d 739, 747 (8th Cir. 2004); MeccaTech, Inc. v.
Kiser, 2008 WL 6010937, at *8 (D. Neb. Apr. 2, 2008); Meccatech Inc. v. Kiser, 2009 WL
1152267 (D. Neb. Apr. 23, 2009). 120 Greyhound Lines, Inc. v. Wade, 485 F.3d 1032, 1035 (8th Cir. 2007); Menz v. New
Holland N. Am., Inc., 440 F.3d 1002, 1006 (8th Cir. 2006); Stevenson, 354 F.3d at 747 (stating
bad faith is required if spoliation happens prior to litigation). 121 See, e.g., Orbit One Commc‘ns, Inc. v. Numerex Corp., 271 F.R.D. 429, 4429 (S.D.N.Y.
2010) (Francis, J.); Victor Stanley II, 269 F.R.D. 497, 526 (D. Md. 2010) (Grimm, J.).
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3. the appropriate sanctions that are proportional to the
spoliating party‘s culpability and the prejudice suffered by the
innocent party.
The ultimate legacy of Pension Committee will not be Judge
Scheindlin‘s controversial per se gross negligence or presumptive
relevance/prejudice rules, though these issues are of instant concern
as litigants and counsel struggle to understand their evolving
responsibilities and liabilities related to e-discovery. Rather,
Pension Committee will likely be remembered as the case that
revitalized the debates and calls to action initially ignited by
Zubulake, which then propelled an immature body of spoliation law
toward cross-jurisdictional consistency.